EFFECT

Returns the effective annual interest rate, given the nominal annual interest rate and the number of compounding periods per year.

Syntax

EFFECT(nominal_rate,npery)

Nominal_rate is the nominal interest rate.

Npery is the number of compounding periods per year.

Remarks

• Npery is truncated to an integer.
• If either argument is nonnumeric, EFFECT returns the #VALUE! error value.
• If nominal_rate ≤ 0 or if npery < 1, EFFECT returns the #NUM! error value.
• EFFECT is calculated as follows:

  

Example

The example may be easier to understand if you copy it to a blank worksheet.

How to copy an example

1. Create a blank workbook or worksheet.
2. Select the example in the Help topic.

   Note Do not select the row or column headers.

   Selecting an example from Help

3. Press CTRL+C.
4. In the worksheet, select cell A1, and press CTRL+V.
5. To switch between viewing the results and viewing the formulas that return the results, press CTRL+` (grave accent), or on the Formulas tab, in the Formula Auditing group, click the Show Formulas button.

See also:

• Financial functions
• NOMINAL